ATMOS ENERGY CORP.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2006
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number 1-10042

Atmos Energy Corporation

(Exact name of registrant as specified in its charter)


Texas and Virginia		75-1743247
(State or other jurisdiction of incorporation or organization)		(IRS employer identification no.)

Three Lincoln Centre, Suite 1800 5430 LBJ Freeway, Dallas, Texas (Address of principal executive offices)		75240 (Zip code)

(972) 934-9227
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares outstanding of each of the issuer’s classes of common stock, as of April 28, 2006.


Class		Shares Outstanding

No Par Value		81,151,592

TABLE OF CONTENTS


GLOSSARY OF KEY TERMS
PART 1. FINANCIAL INFORMATION
	Item 1. Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits
SIGNATURES
EXHIBITS INDEX
Computation of Ratio of Earnings to Fixed Charges
Letter Regarding Unaudited Interim Financial Information
Certification Pursuant to Rule 13a-14(a)/15d-14(a)
Certification Pursuant to Section 1350

GLOSSARY OF KEY TERMS


AEH		Atmos Energy Holdings, Inc.
AEM		Atmos Energy Marketing, LLC
AES		Atmos Energy Services, LLC
APB		Accounting Principles Board
APS		Atmos Pipeline and Storage, LLC
Bcf		Billion cubic feet
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN		FASB Interpretation
Fitch		Fitch Ratings, Ltd.
GPSC		Georgia Public Service Commission
GRIP		Gas Reliability Infrastructure Program
KPSC		Kentucky Public Service Commission
LGS		Louisiana Gas Service Company and LGS Natural Gas Company, which were acquired July 1, 2001
LPSC		Louisiana Public Service Commission
Mcf		Thousand cubic feet
MMcf		Million cubic feet
Moody’s		Moody’s Investors Services, Inc.
MPSC		Mississippi Public Service Commission
NYMEX		New York Mercantile Exchange, Inc.
RRC		Railroad Commission of Texas
RSC		Rate Stabilization Clause
S&P		Standard & Poor’s Corporation
SEC		United States Securities and Exchange Commission
SFAS		Statement of Financial Accounting Standards
TRA		Tennessee Regulatory Authority
TXU Gas		TXU Gas Company, which was acquired on October 1, 2004
WNA		Weather Normalization Adjustment

PART 1. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31,			September 30,
	2006			2005
	(Unaudited)
	(In thousands, except
	share data)

ASSETS
Property, plant and equipment	$	4,943,329		$	4,765,610
Less accumulated depreciation and amortization		1,432,287			1,391,243

Net property, plant and equipment		3,511,042			3,374,367
Current assets
Cash and cash equivalents		48,899			40,116
Cash held on deposit in margin account		13,537			80,956
Accounts receivable, net		793,019			454,313
Gas stored underground		440,946			450,807
Other current assets		195,412			238,238

Total current assets		1,491,813			1,264,430
Goodwill and intangible assets		737,495			737,787
Deferred charges and other assets		256,701			276,943

	$	5,997,051		$	5,653,527


CAPITALIZATION AND LIABILITIES
Shareholders’ equity
Common stock, no par value (stated at $.005 per share); 200,000,000 shares authorized; issued and outstanding: March 31, 2006 — 81,077,197 shares; September 30, 2005 — 80,539,401 shares	$	405		$	403
Additional paid-in capital		1,447,734			1,426,523
Retained earnings		287,727			178,837
Accumulated other comprehensive loss		(29,575	)		(3,341	)

Shareholders’ equity		1,706,291			1,602,422
Long-term debt		2,181,120			2,183,104

Total capitalization		3,887,411			3,785,526
Current liabilities
Accounts payable and accrued liabilities		708,134			461,314
Other current liabilities		380,026			503,368
Short-term debt		262,315			144,809
Current maturities of long-term debt		3,308			3,264

Total current liabilities		1,353,783			1,112,755
Deferred income taxes		287,841			292,207
Regulatory cost of removal obligation		275,209			263,424
Deferred credits and other liabilities		192,807			199,615

	$	5,997,051		$	5,653,527

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended
	March 31
	2006			2005
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	1,447,620		$	1,235,377
Natural gas marketing segment		818,629			512,891
Pipeline and storage segment		45,483			45,546
Other nonutility segment		1,595			1,278
Intersegment eliminations		(279,481	)		(110,007	)

		2,033,846			1,685,085
Purchased gas cost
Utility segment		1,131,885			912,309
Natural gas marketing segment		774,652			501,731
Pipeline and storage segment		211			4,407
Other nonutility segment		—			—
Intersegment eliminations		(278,305	)		(109,256	)

		1,628,443			1,309,191

Gross profit		405,403			375,894
Operating expenses
Operation and maintenance		112,698			103,420
Depreciation and amortization		47,076			45,326
Taxes, other than income		64,796			54,967

Total operating expenses		224,570			203,713

Operating income		180,833			172,181
Miscellaneous (expense) income		(2,439	)		958
Interest charges		35,492			33,073

Income before income taxes		142,902			140,066
Income tax expense		54,106			51,564

Net income	$	88,796		$	88,502

Basic net income per share	$	1.10		$	1.12

Diluted net income per share	$	1.10		$	1.11

Cash dividends per share	$	0.315		$	0.310

Weighted average shares outstanding:
Basic		80,573			79,270

Diluted		81,040			79,760

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Six Months Ended
	March 31
	2006			2005
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	2,852,630		$	2,149,058
Natural gas marketing segment		1,920,474			1,006,692
Pipeline and storage segment		85,195			89,236
Other nonutility segment		3,087			2,637
Intersegment eliminations		(543,720	)		(193,914	)

		4,317,666			3,053,709
Purchased gas cost
Utility segment		2,256,714			1,568,679
Natural gas marketing segment		1,850,178			968,688
Pipeline and storage segment		211			10,628
Other nonutility segment		—			—
Intersegment eliminations		(541,430	)		(192,283	)

		3,565,673			2,355,712

Gross profit		751,993			697,997
Operating expenses
Operation and maintenance		220,915			214,197
Depreciation and amortization		90,336			89,323
Taxes, other than income		110,212			93,622

Total operating expenses		421,463			397,142

Operating income		330,530			300,855
Miscellaneous (expense) income		(1,991	)		1,343
Interest charges		71,681			65,615

Income before income taxes		256,858			236,583
Income tax expense		97,035			88,482

Net income	$	159,823		$	148,101

Basic net income per share	$	1.99		$	1.92

Diluted net income per share	$	1.98		$	1.90

Cash dividends per share	$	0.63		$	0.62

Weighted average shares outstanding:
Basic		80,444			77,290

Diluted		80,911			77,769

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	March 31
	2006			2005
	(Unaudited)
	(In thousands)

Cash Flows From Operating Activities
Net income	$	159,823		$	148,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization:
Charged to depreciation and amortization		90,336			89,323
Charged to other accounts		334			477
Deferred income taxes		58,199			42,605
Other		7,587			3,315
Net assets/liabilities from risk management activities		(24,041	)		20,247
Net change in operating assets and liabilities		(143,847	)		96,025

Net cash provided by operating activities		148,391			400,093
Cash Flows From Investing Activities
Capital expenditures		(213,230	)		(137,466	)
Acquisitions		—			(1,912,532	)
Other, net		(2,842	)		(1,957	)

Net cash used in investing activities		(216,072	)		(2,051,955	)
Cash Flows From Financing Activities
Net increase in short-term debt		117,506			—
Net proceeds from issuance of long-term debt		—			1,385,847
Repayment of long-term debt		(2,162	)		(3,849	)
Settlement of Treasury lock agreements		—			(43,770	)
Cash dividends paid		(50,933	)		(49,211	)
Issuance of common stock		12,053			26,025
Net proceeds from equity offering		—			382,014

Net cash provided by financing activities		76,464			1,697,056

Net increase in cash and cash equivalents		8,783			45,194
Cash and cash equivalents at beginning of period		40,116			201,932